The Bear Den by Shortside Jonny
Mon. November 29, 2021 – DIA 351.19 +.62%, QQQ 399.69 +2.17%, SPY 464.60 +1.23%, IWM 222.71 -.06% CNN Fear/Greed Index 40
Pending Home Sales reported in +7.5% better than expected. Interest rates climbed with the 2-Year note spiking, flattening the yield curve, with the 10-Year Index (TNX) 15.38 +.48 moving up in yield. Although the major averages closed up on the day after a rebound from an illiquid Friday mini-panic on the Omicron COVID-19 variant, the broader market was weak. Technology (XLK) 170.14 +2.50% performed best, followed by Consumer Discretionary (XLY) 207.24 +1.55%. Salesforce.com (CRM) 296.74 +4.41% led the DJIA ahead of the company’s earnings release Tuesday AMC. Merck (MRK) 74.89 -5.39% was the laggard in the DJIA, as reports surfaced that its new therapeutic for COVID-19 might not be as effective as originally reported. Moderna (MRNA) 368.51 +11.80% led the NDX 100 continuing its rally on the news of the new variant from the prior week. Semiconductor related shares were the clear group under buying pressure as Lam Research (LRCX) 680.54 +6.01%, Nvidia (NVDA) 333.76 +5.95%, Applied Materials (AMAT) 151.22 +5.53%, NXP Semi (NXPI) 223.94 +5.41%, and Microchip (MCHP) 84.5 +5.41% all dominating the NDX100.
Tue. November 30, 2021 – DIA 334.90 -1.79%, QQQ 393.82 -1.47%, SPY 455.56 -1.95%, IWM 218.17 -2.04% CNN Fear/Greed Index 26
The S&P Case Shiller Home Price Index (YoY) for Sept. was reported at +19.1% less than the +19.3% anticipated. The day’s action was dominated by the first day of testimony of Fed Chairman Jerome Powell before Congress. In the pre-testimony release of his statement to Congress after the close Monday evening, markets appeared to glean no change in perceived policy with an assumption that the new COVID-19 variant would potentially soften policy. Upon his testimony at the end of the question period, Powell stated that the end of QE might be hastened by about 2 months and that the Omicron variant might not be as disruptive as some had assumed. That sent markets into a selling squall. The major S&P 500 sectors all closed down with Technology (XLK) 168.72 -.83% holding up the best followed by Consumer Discretionary (XLY) 204.44 -1.35%. One stock dominated the action in the DJIA, NDX100, and S&P 500, Apple Inc. (AAPL) 165.30 +3.16% closing up on the day, as traders focused on what appeared to be a relative strength and safety play in a down market. In response to a sales miss, Chinese internet retailer, Pinduoduo (PDD) 66.50 -7.59% continued to hit new 52-week lows, with JD.com (JD) 84.11 -4.32% moving lower in sympathy. In retail, The Gap Inc (GPS) 16.53 -7.13% continued to hit 52-week lows. The stock was as high as 37 in May. The shares appear to be a potential candidate for a “tax bounce” going into the end of the year.
Wed. December 1, 2021 – DIA 340.46 -1.29%, QQQ 387.12 -1.70%, SPY 450.54 -1.10%, IWM 213.15 -2.30% CNN Fear/ Greed Index 22 (extreme fear)
The ADP Employment Change (Nov) showed better growth than anticipated +534K vs. 525K. ISM Manufacturing PMI (Nov) came slightly better than anticipated 61.1 vs. 61. Prices Paid were better than expected 82.4 vs. 85.5. Fed Chair Jerome Powell gave his second and final day of testimony to Congress and failed to walk back his more hawkish comments on the ending of QE earlier from the day before. The first cases of the Omicron variant virus had started to be detected in several parts of the world including the US. As is often the case, low beta defensive sectors fared best on the day, with Healthcare Services (XLV) 129.50 -.18% holding up best followed by Consumer Staples (XLP) 69.95 -.48%. Communications Services (XLC) 71.63 -2.31% performed the worst, followed by Consumer Discretionary (XLY) 200.75 -1.80%. Pharmaceutical giant Johnson & Johnson (JNJ) 158.08 +1.38% was the top performer in the DJIA. Salesforce.com (CRM) 251.50 -11.74% was the clear laggard after having posted a beat on the top and bottom-line earnings, but cutting guidance for the next quarter. Semiconductor equipment manufacturing firm Ambarella (AMBA) 204.89 +14.13% posted an earnings and revenue beat. Applied Materials (AMAT) 151.67 +3.04 and Lam Research (LRCX) 693.53 +1.78% continued to show relative strength on the news by Ambarella. Leading both the S&P 500 and the NDX 100 Vertex Pharmaceuticals (VRTX) 205.00 +9.66% advanced after the release of a Phase -2 trial on its drug candidate VX-147 for APOL1 mediated Focal Segmented Glomerulosclerosis for a form of kidney disease. On the downside after having a significant run-up in price in the last week, vaccine manufacturer Moderna (MRNA) 310.61 -11.87% came under selling pressure after a loss on a patent case with Arbutus Biopharma (ABUS) 4.61 +44.06%.
Thur. December 2, 2021 – DIA346.61 +1.81%, QQQ 389.91 +.72%, SPY 457.40 +1.53%, IWM 219.21 +2.79% CNN Fear/Greed Index 25 (extreme fear)
Initial Jobless Claims came in lower than expected at 222K vs. 240K. The OPEC meeting ended with a statement that supply would be increased. Shrugging off the news, WTI crude advanced from an oversold condition, 67.43 +1.86 dollars. Markets were higher on the day in a rebound from the prior two days of volatile selling pressure. Financials (XLF) 38.66 +2.98% and Industrials (XLI) 102.32 +2.97% were the best performing sectors, While Healthcare (XLV) 130.13 +.49% and Technology (XLK) 167.94 +.92% lagged the S&P 500. Aircraft industry manufacturer Boeing (BA) 202.38 +7.54% led the DJIA, as China’s aviation regulator released a statement that the 737-Max would be eligible to re-enter service by the end of the year. Pandemic re-opening stocks in travel & entertainment caught buying interest and were top performers in the S&P 500, with Delta Airlines (DAL) 36.64 +9.28%, American Airlines (AAL) 17.42 +7.00%, Carnival Cruise Lines (CCL) 17.89 +9.22%, Norwegian Cruise Lines (NCLH) 19.16 +7.70%, and Wynn Resorts (WYNN) 82.29 +8.19% all outperforming. On the downside, coming under profit-taking were Semiconductor companies Lam Research (LRCX) 661.52 -4.62%, Applied Materials (AMAT) 146.49 -3.42%
Fri. December 3, 2021 – DIA 346.24 -.11%, QQQ 383.13 -1.74%, SPY 453.42 -.87%, IWM 214.71 -2.05% CNN Fear/Greed Index 20 (extreme fear)
Non-Farm Payrolls disappointed reporting in at +210K vs. 550K expected. The top line number spooked market traders, but beneath the surface, other data supported the contention of a strengthening economy. The Labor Force Participation rate improved to 61.8% from 61.6%. The U6 Underemployment rate improved markedly to 7.8% from the previous 8.3%. ISM Services Employment Index (Nov) came in at 56.6 vs. 52.2 expected, while the ISM New Orders index also reported higher than expected 69.7 vs. 64. Equity markets were broadly lower on the day. Low beta and defensive stocks outperformed. Consumer Staples (XLP) 71.57 +1.24%, and Healthcare Services (XLV) 130.37 +.18% performed best. Drugstore retailer Walgreen’s Boots Alliance (WBA) 46.53 +4.28% led the DJIA after reports surfaced that the firm was exploring the sale of its UK chemist (drug) stores. Household & personal care goods manufacturer and distributor Proctor & Gamble (PG) 149.88 +1.78% advanced on safe-haven bid. Leading the NDX 100 and the Russell 3000 Marvell Semiconductor (MRVL) 83.59 +17.68% broke to new highs on an earnings and revenue beat. The shares received upgrades by both Goldman Sachs and Cowen, with both raising target prices significantly. The big disappointment on the day was the plunge post earnings of DocuSign (DOCU) 135.09 -42.22%, as the pandemic technology favorite beat earnings and revenue expectations, but gave decidedly weak guidance for the company’s billings and revenue expectations in the coming quarter.
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